QUESTION 11 Pro forma financial information: Is illegal Is found in the statemen

Question

QUESTION 11

Pro forma financial information:

Is illegal

Is found in the statement of stockholders equity

Usually focuses on pro forma earnings, usually on a non-GAAP basis

Is always presented on a generally accepted accounting principles (GAAP) basis

1 points   

QUESTION 12

ABC Co. records marketable securities as trading securities. This means that:

These are recorded at fair value and gains & losses reported directly to stockholders equity

These are recorded at fair value and gains & losses reported as extraordinary items

These are recorded at fair value and gains & losses reported as operating income

These are recorded at amortized cost

1 points   

QUESTION 13

XYZ has the following information on fixed assets for 2001 (in millions): net property plant & equipment, $564; accumulated depreciation, $260; ending gross investment, $824; and depreciation expense, $95. XYZ's fixed assets have an average depreciable life of:

31.6%

2.7 years

36.5%

8.7 years

1 points   

QUESTION 14

Given the information from Question 13 above, XYZ's fixed assets have an average age of:

36.5%

2.7 years

8.7 years

31.6%

1 points   

QUESTION 15

Apila has the following information on income tax for 2001: income tax expense, $409; pretax income, $1,231; taxes payable, $257; net income, $876. Apila has an effective tax rate of:

46.7%

20.9%

71.2%

33.2%

1 points   

QUESTION 16

Capital leases:

Are recorded at amortized cost less gains & losses, which are recorded directly to stockholders equity

Are recorded as rent expense monthly

Transfer risks and rewards of ownership & recorded as both assets & liabilities

Require off-balance-sheet reporting

1 points   

QUESTION 17

Big Steel Co. has the following accounts:

Current assets

$10,000

Property, plant & equipment

$240,000

     Less: accumulated depreciation

100,000

140,000

Total assets

$150,000

Gross profit

$95,000

Depreciation expense

$25,000

Tax expense

$10,000

Net income

$55,000

The average age of fixed asset is estimated to be:

3 years

1 year

2 years

4 years

1 points   

QUESTION 18

Given the information from Question 17, the average age % of fixed assets is:

71.4%

25.0%

10.0%

41.7%

1 points   

QUESTION 19

Cooper Copper Co. uses straight-line depreciation for financial reporting and double declining balance for tax. Using straight line the company reports tax of $41,000; under double declining balance tax is $34,000. Cooper would record:

Deferred tax liability of $7,000

Taxes payable of $41,000

Deferred tax asset of $34,000

Deferred tax asset of $7,000

a.

Is illegal

b.

Is found in the statement of stockholders equity

c.

Usually focuses on pro forma earnings, usually on a non-GAAP basis

d.

Is always presented on a generally accepted accounting principles (GAAP) basis

Explanation / Answer

11. Answer C.

Proforma financial information is prepared based on Assumptions usually on Non-GAAP basis

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